Omicron impacting Central China steel mills' production

The highly-transmissible Omicron variant of the COVID -19 virus is spreading fast in China, and steel mills in the most affected area of Central China, are reporting disruptions a week after the variant was first confirmed in North China's Tianjin municipality on January 8.

As of Friday, Chinese medical authorities were responding to the spreading virus in Anyang city in Central China's Henan province, some 400 kms southwest of Tianjin after two Omicron cases were confirmed on January 9. Local media reports said the infection had been traced to a student who had travelled from Tianjin.

As of late Friday, the new variant cases were mainly concentrated in these two regions, Mysteel Global notes. As of January 13, 143 local COVID cases were reported across China, among which 98 were in Henan and 34 in Tianjin.

Local steel producers in Tianjin were still managing to produce normally by Wednesday though transportation of raw materials and finished steel were being disrupted, as Mysteel Global reported. However, in the more populated Henan province, the harder fight against the pandemic has begun affecting steel production, as well as the daily lives of employees, Mysteel Global understands.

Henan, home to nearly 100 million people, is China's third most populous province and it is also a key steel production base. On the most recent data, Henan produced around 35.3 million tonnes of crude steel in 2020, equivalent to 3.3% of the country's total that year.

In Anyang, the Henan city most affected by lockdowns and restraints on movement of people and vehicles, a local steel mill with 2 million tonnes/year capacity has completely suspended operations over the past few days, officials from the mill confirmed on Friday.

"Production was halted three days ago, as no raw materials are arriving at the works, with trucks both entering and leaving the premises are now prohibited," one official said. The company mainly produces rebar and wire rod and relies on trucks for most transportation, according to the official.

"To overcome the pandemic is now the top priority, and everything else should be put behind," she said.

Some employees are required to be quarantined at the plant and be COVID-tested once a day, according to her. "I really hope this will end soon," she said.

Officials at a 10 million t/y steelmaker, also located in Anyang, said that restrictive measures have been applied to his company but that for the moment, the plant can still maintain production levels as the works can draw upon internal stocks raw materials or use rail to transport the necessary feeds.

"The impact on our production will not be so evident, because we have already greatly reduced our output in order to meet the very strict environmental protection requirements," he said.

A trader based in East China's Shandong supplying iron ore to Henan steel mills said that production at local mills was being disrupted due to the Omicron variant being detected, but he said this is unlikely to affect the iron ore market much.

"Henan steel mills already replenished iron ore earlier (before the recent outbreak) and they are observing production restrictions, so they would not buy much even were there not Omicron outbreak," he said.

Written by Olivia Zhang, zhangwd@mysteel.com and Victoria Zou, zyongjia@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.